Suppression and limitation in excise: prior departmental knowledge defeated the extended period and justified interim stay of recovery.

Where the record showed that the department already knew the relevant manufacturing process, including the use of ammonia and the handling of nitric acid under permitted common storage, an allegation of suppression was not prima facie sustainable. On that basis, the notice appeared prima facie barred by limitation. Because the demand and penalties were thus treated as time-barred at the interim stage, no immediate deposit of duty or penalties was required, and recovery was stayed pending the matter.

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Issues: (i) Whether the demand and penalties were prima facie barred by limitation in view of the department's knowledge of the relevant facts; (ii) Whether the applicants were entitled to waiver of deposit and stay of recovery.

Issue (i): Whether the demand and penalties were prima facie barred by limitation in view of the department's knowledge of the relevant facts.

Analysis: The flow chart produced by the assessee showed the use of ammonia and the disposal of nitric acid in different streams, including manufacture of ammonium nitrate phosphate. The manufacture process also indicated that ammonia necessarily had to pass through nitric acid before the final product could be made. Since nitric acid was being cleared on payment of duty and common storage had been permitted, the department would have been aware of the relevant facts. On that basis, the allegation of suppression was not prima facie sustainable.

Conclusion: The notice was prima facie barred by limitation.

Issue (ii): Whether the applicants were entitled to waiver of deposit and stay of recovery.

Analysis: Once the demand was found to be prima facie time-barred, no immediate deposit of duty or penalties was called for at the interim stage.

Conclusion: Waiver of deposit was granted and recovery of the duty and penalties was stayed.

Final Conclusion: The interim relief was granted because the demand appeared prima facie time-barred, and the appellants were protected from coercive recovery during the pendency of the matter.

Ratio Decidendi: Where the material placed before the Tribunal shows that the department was already aware of the relevant facts, an allegation of suppression cannot, at the interim stage, justify invocation of the extended period of limitation.

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